Town Square

Palo Alto reboots its dream of a fiber network

Original post made
on Mar 18, 2013

For more than 15 years, Palo Alto's drive toward a citywide fiber network flickered on and off like a faulty dial-up connection, with gusts of enthusiasm repeatedly stymied by long stretches of inactivity, frustration and disappointment. This time, officials hope, things will be different.

Posted by Wayne Martin
a resident of Fairmeadow
on Mar 18, 2013 at 11:53 pm

Palo Alto City Council
City of P al o A lt o
Palo Alto , CA 94301
Cc: James Keene

Subject: City-owned Fiber-to-the-Premises (FTTP)

Elected Council:

> The infrastructure discussion is the last item on the council's
> agenda, and the meeting is scheduled to begin at 6 p.m. with
> a study session on the possible expansion of the city's fiber-
> optic network, known for years as "Fiber to the Premises,"

This FTTP project has been discredited every time it has been put forward. Last time, the (also) discredited Head of the Utilites, spent about $125,000 on a "business plan" that was so incomplete that when the Consultant came back for another $125K (for a possible total of $250K)--even the people pushing for City-subsidized fiber encouraged the Council to deny the request--which it did.

The orginal proposal was for the City to provide data, telephone and subscription TV services. The analysis at the time made it clear that the City would have to displace the current analog telephone providers (AT&T mostly) with City-provided telephone service. That meant that roughly half of the telephone subscribers would have to ditch their current providers, and subscribe to the City's telephone service.

Since that time, there has been a tremendous shift in the way people use telephones. All of the major providers are seeing a monthly loss in landline subscribers--with a shift to evermore powerful, and capable, mobile Internet devices (smartphones, tables, etc.). The FCC is curretly in the process of opening up more bandwidth for WiFi, since regional wireless data networks are becoming more prevailant. Many smartphones come with both 3G/4G and Wifi capabilies, so that the phone can "off-load" data, and voice, to the local WiFi network, reducing load on the regional net, and reducing customer costs.

AT&T has been adding additional wireless capacity to the Palo Alto area, and doubtless we will see increases in regional network capacity in the coming years.

Cable TV is also undergoing constant evolution. The arrival of IP-TV has opened many doors. Sites like HULU.com, THEWB.com, ABC.com, NBC.com, Fox.com, UVERSE.com, and others, now offer many Prime-Time Network shows for free, as well as a lot of older TV programming, also for free. (Shows like Quincy , Remington Steele, Picket Fences are available). Hulu offers a premium option, offering access to all of a given show's episode for something less than $10/month. The same is true for Amazon, Netflix and Youtube is also offering a lot of programming that includes shows that originated outside the US .

The Cable channels have been toying with offering "al a carte" pricing for a long time now. Given that programming can be delivered to mobile devices, every one of the content providers has been moving towards a recreation of the Cable-TV market. The idea that people are going to purchase their TV from the City of Palo Alto does not make a lot of sense to people who are enoying the freedom, and often low expense to the user, that is offered by the Internet.

This leaves only very high-speed data as something that the City might be able to find a niche to market its fiber services--at least until AT&T/Comcast respond. AT&T has upgraded Palo Alto to its Uverse capability over the past few years. Comcast also has run fiber to the neighborhood a long time ago. Comcast has announced its support for DOCSYS 3.0 within the last two years, primarily through its XFINITY product offering:

The main issue for any data customer is: "how much speed can I get for how much money?"

The City was pitching that it could offer 100mbs for $35 dollars at one point. However, it eventually backed off to admit that it would have to offer a "triple play" (data, telephone, TV) package for $100/month in order to eventually pay off the costs of the system (and that was based on the incomplete business model). All of the major vendors have offered packages of one form or another that fit into this cost profileleaving the City with nothing much to offer except the 100mps claim.

The argument that new ind ustries would develop because the City had FTTH has nev er carried much weight with Palo Alto , particularly since AT&T/3rd Party vendors easily provided Fiber to those businesses that needed it. The City's own Fiber business seems to have nev er been attractive to local customersattracting somewhere between 50 and 75 customers.

The idea that this offering would be discussed in the same context would imply that peopleincluding the Mayorseem to think that the hardwar e/software/maintenance for FTTP could be hidden inside a bond issue is reprehensible. This sort of financing would have people owning property, but not subscribing to City telecommunications services, to be expected to pay the infrastructure costs for those who are subscribers. Just another example of the kinds of fiscal mismanagement that one finds when one looks at government activities.

Historically, the cost of a Fiber "drop" (premises termination equipment) has been in the $1,500 to $2,500 range. Fiber proponents have always claimed that that the cost would come down to about $250/dropas fiber gained more acceptance. As it were, fiber has not gained that much acceptanceeven though Verizon did upgrade a significant portion of its customer based with fiberthe cost of very high speed data was simply too expensive for people who had limited need for it. Most people seem financially comfortable with slower speed DSL, and Verizon has slowed down its fiber upgrades.

The bottom line is that Fiber is very expensivealbeit very fast. People are not willing to pay for that level of service in the home, for the most part. That's true all over the US including Palo Alto .

Posted by Mr.Recycle
a resident of Duveneck/St. Francis
on Mar 19, 2013 at 12:48 am

@Wayne - 85% of Verizon FIOS customers also opt for a TV package. Long term you are probably right that TV will be delivered primarily over the internet, but a "triple play" type package is certainly viable for the near future. Where FIOS is available, about 1/3rd of the people have already opted in, and give it a couple years and that number should easily pass 50%.

I don't want city run FTTP, but find a good commercial partner, and get us a real alternative to Comcast and ATT which are both substandard. I'm sitting here right now with "No Service" in my house from ATT. Comcast is slow, expensive, and unreliable.

Posted by Wayne Martin
a resident of Fairmeadow
on Mar 19, 2013 at 7:43 am

> but a "triple play" type package is certainly
> viable for the near future

No one can foretell the future, but there is a lot of talk in various trade publications about "cable-cutters", and certainly we have seen a hard shift towards mobile phones worldwide. It's not hard to find news articles on the WEB claiming that there are now over 4 Billion cell phone subscribers. There are so many cell phone subscribers in the so-called 3rd world that many medical services providers are expecting to see primary medical care delivered through cell phoneswhere landlines don't exist, or don't have much reliability.

I just have trouble believing that the City of Palo Alto can provide better telephone service that our current providers, or better television programming than our current providersmaking any City-offer "triple play" not likely to be a superior product in any conceivable way.

> AT&T -> No Service.

I have AT&T, and have not had much trouble with its reliability. By, and large, I would probably say that they have provided me 99.9x% uptime. I have suffered a few outages, and there was a period of time where I was victim to a problem where the 2-pair servicing my DSL modem developed a problem. It took several calls until a technician figured out the problem and reassigned the wiring servicing my home. After that, the service has been very reliable.

Recently I was upgraded to U-Verse. The top speed offered is only 6mbps, but one only needs so much for surfing the web, or reading/sending email. I am a heavy consumer of IP-TV, but that seems to work fine at lower speeds, and lower video encodings. Comcast has been offering a 16mbps service for a year, or two, now. Posting on the web from "Blast" customers seem to suggest that they are getting 3xmbps download speeds.

I would like to have higher speeds, but frankly, I don't see any value for having blazingly fast speeds, at any price, that sit idle most of the day. Keep in mind that not only is there a "front-end" to any data network, but there also is a "back-end" that connects to the Internet. These ultra high-speed connections are not cheap (OCx connections range from $50K/month and up). All local networks need to be provisioned with adequate network access, or a bottleneck will develop at the local network/outer network connection.

I, too, am not all that happy with AT&T, but am not convinced that any local provider will, in the long run, be any better. Cable TV providers seem to have some of the lowest customer satisfaction indexes of any company in the US.

Posted by Wayne Martin
a resident of Fairmeadow
on Mar 19, 2013 at 8:05 am

> local provider ..

People who have moved into Palo Alto within the last ten years might not realize that the City was deeply involved in Cable TV business from the mid-'70s about 2000 (or so). It took the City about 10 years to evaluate Cable TV providers, ultimately awarding the Cable TV franchise to a local group that had absolutely no experience in running a Cable TV operation. The history of this operation is tortured, ending in its finally having to sell out to a larger operation, which changed hands a couple of timesending up with Comcast being the service provider.

The so-called Cable Coop started thinking about Fiber some five years (or so) before its demise, but was unable to raise the necessary tens of millions to convert its operation from analog to digital. The venture capital people who were approached could not see their way clear to invest one penny in this operation.

Oh, and the City was sued successfully by another Cable provider because it refused to allow more than one Cable franchiser to operate within the city (if memory serves). This suit occurred back in 1988 (again, if memory serves).

So many of these problems would be solved if the City were to divest itself from the Utility, and stick to the problems that City governments are best suited for.

Posted by jerry99
a resident of Barron Park
on Mar 19, 2013 at 10:38 am

The city spends endless time thinking of ways to spend taxpayer money. I would not payy 5$ to have another service added to my home. If the city wants to do something useful, renegotiate the contracts to decrease the city worker pensions, which are killing the taxpayers and increasing all city fees every year.
Stop wasting time on recyclable bags, parking, allowing endless new construction that will make the city a communiting nightmare, etc.

Why has FTTP suddenly come to the top of the City Agenda again as we consider an infrastructure bond measure? Well, new Mayor Greg Scharff put it front and center in his State-of-the-City address. He called it keeping Palo Alto in a leadership roll in the future of technology.

I don't happen to agree with Greg Scharff, it is now "old" technology at a time when everything is going wireless. I'm a Wayne Martin supporter on this issue.

Posted by Been here, been there
a resident of Another Palo Alto neighborhood
on Mar 19, 2013 at 12:03 pm

I have lived in a lot of different places all over the world, including Singapore, Hog Kong, Germany, and England. I have visited many, many more since the nineties. But absolutely nowhere have I had slower Internet than in Palo Alto. Literally, even the remote Scottish Highlands had better service!

Palo Alto needs together it together, because this is unacceptable for the heart of Silicon Valley!

Posted by Mr.Recycle
a resident of Duveneck/St. Francis
on Mar 19, 2013 at 12:14 pm

>No one can foretell the future

Which is why I want 300Mb/s. Look at the excitement in Kansas City around Google fiber.

> I just have trouble believing that the City of Palo Alto can provide better telephone service that our current providers,

I agree, but that doesn't mean they can't work to get a company like Sonic.net or Google to come in and offer some more competition to Comcast/ATT.

> Recently I was upgraded to U-Verse. The top speed offered is only 6mbps, but one only needs so much for surfing the web, or reading/sending email

Bluray quality streaming is 25-35Mb/s. Have kids and a second TV? 70Mb/s. Wife wants to make a VOIP call too? In our house, only getting sub 20Mb/s from Comcast is already not enough. Do you ever go to a site to watch a video, and have to wait for it to start, or wait while some software update is taking 30 min to download? That's unnecessarily wasted time.

Posted by Organiclaws
a resident of Crescent Park
on Mar 19, 2013 at 12:35 pmOrganiclaws is a registered user.

Crescent Park Dad,

WiFi is not worth it given the improving phone speed. Have you used Mountain View Wifi? My experience has been that it is less reliable, mostly slower the LTE, and spotty coverage. It wouldn't be practical for households to drop their internet service and just use WiFi.

I used to live in Verizon territory and had FIOS. Better TV quality, and much faster internet which was especially noticeable doing things like uploading video and photos. We had a symmetrical 35/35 connection. It was also substantially more reliable the Comcast. I loved it and it was a painful downgrade to have to switch to Comcast.

Posted by Sonic customer
a resident of Another Palo Alto neighborhood
on Mar 19, 2013 at 1:09 pm

We like our Sonic.Net Fusion broadband & phone service better than our old AT&T DSL. Costs $50/month (incl. taxes) for ~15 Mbps internet and free national calls without a contract term. They have great customer service too. We use an antenna for local TV channels.

The key question is can a City government be effective in offering a competitive service? Alameda Municipal Power lost a bundle when they sold their struggling telecom business unit.

Posted by the_punnisher
a resident of Mountain View
on Mar 19, 2013 at 2:25 pmthe_punnisher is a registered user.

The real problem is the very old infrastructure in the different parts of the SFBA.
I found out that sonic.net was only a middleman with the original owner of the 40+ year old wiring when it comes to DSL. When I modernized the house wiring, every service tech immediately blamed me, my equipment and the wiring inside the house ( I'm a Data Communications Engineer with experience on all connectivity aspects ) for the problem. After the fourth service call, my parents were shocked to hear me bar the door and force the technician to check THEIR wiring from the house and to the pole.

The next day, acrew came out with a bucket truck and replaced all THEIR WIRING from the service entrance out to the DSL/telephone.

That is the basic problem Palo Alto faces. EVERYTHING will have to replace and the ROI is not there for a private company to replace wiring with F/O. The city of Palo Alto hasn't done the right thing either except spend money studying the problem with taxpayer $$$.

No reasonable ROI = no private company will do the job.

Google did R&D on wireless hardware in MV. I used it only when I had to report another Telephone/DSL outage. The service was only a slow backup to a paid DSL line...

the new 802.11ac standard can achieve more than three times the performance of the current standard, with
speeds up to 1.35 Gigabits per second. What's more, 802.11ac has the capability to maintain a higher level of performance at any
range, compared with its predecessors.
---

Wireless performance will push 1Gb with the 802.11ac standard. A new standard for 802.11x has been coming along every two-three years, so this is not likely to be the last WiFi performance enhancement.

> coverage is spotty in Mountain View.

The MV WiFi network was a gift of Google. It seems to have been more of an experiment that a well thoughtout implementation. More nodes in the network would cure the spotiness, with a small increase in cost.

Posted by FrankF
a resident of Ventura
on Mar 19, 2013 at 2:32 pmFrankF is a registered user.

Wifi has a role to play but fiber to the home is much better. It will can be fast in certain small installations but it just cannot handle the huge load of users we would eventually put on it. Besides if neighbors strenuously object to adding a simple cell phone tower think what they will say about putting a wifi antenna two or three on each block. Do you think we have great cell phone service?

I'm excited to see it getting such interest again (it should never have been killed). As for it not making business sense - I do sympathize with the idea that the city should not blindly rush out and invest in a something that might not pay for itself but this is hardly the case here.

Personally I would skip the cable TV service and even phone service because I can get these myself over internet - but I'd be open to the ideas is needed to make the network more usable to others.

Posted by resident
a resident of Embarcadero Oaks/Leland
on Mar 19, 2013 at 2:32 pm

It would be great to have some sort of bigger-picture, comprehensive plan wrt laying fibre cables, as the fibre nettork is not something for mere talk or software that you can redo without financial penalty. It was funny, and heartbreaking that when City of Palo Alto repaved the sidewalks many years ago. First, repavement for underground utility cables. A few weeks, bright and shiny new sidewalks at intersections were torn up completely to redo for disability access!!! Same pieces o sidewalk, same city, same utility department,but two different contractors!!! Wouldn't it be great if fibre cables were installed the same time as the underground utility cables? Would be lower the initial cost for residence to just the cost of the cables??? Bu then, like they said, when it is not your money (I am pointing at PA Utility Department), why do you care?

Posted by Wayne Martin
a resident of Fairmeadow
on Mar 19, 2013 at 2:58 pm

Verizon Confirms No Plans To Expand FIOS:Web Link
Testifying before Congress this week to defend the deal, Verizon's General Counsel Randal Milch made it rather clear that Verizon had never had any intention to expand FiOS further. As the webcast (around minutes 35 and 66) notes, Milch made it pretty clear that there's no plan for FiOS expansion -- adding that "Wall Street punished us for investing in FIOS."
------
Verizon Communications Should Move on Verizon Wireless  AnalystWeb Link

The world is very excited about mobile communications devices .. but not so much Fiber-to-the-Home.

Posted by Dan
a resident of Another Palo Alto neighborhood
on Mar 19, 2013 at 3:35 pm

Whaever is considered, step one should be COST and AFFORDABILITY for the many non-wealthy Palo Alto residents. Why do a Cadillac plan when fast WiFi would be good enough? Also, the Palo Alto Process of taking forever to make decisions will make sure that the fiber is obsolete by the time it is forced on us....

Posted by MV Resident
a resident of Mountain View
on Mar 19, 2013 at 3:55 pm

@Crescent Park Dad:

As my handle implies, I am indeed a resident of Mountain View. Yes, there is free WiFi, but it is not reliable as it once was. The service quality (speed, reception) has steadily degraded over the years until it became largely unusuable.

The Mountain View Voice (a sister publication to Palo Alto Online) reported on this issue back in January:

Google provided the citywide WiFi network free of charge, but they also promised to provide reliable WiFi service to the Mountain View Public Library and often the service at that location is dead.

It was a fine service when it worked, and there is evidence that they are currently making some sort of effort to correct the worst issues, but do not fall under the false belief that Google WiFi is reliable and plentiful.

Posted by Mr.Recycle
a resident of Duveneck/St. Francis
on Mar 19, 2013 at 3:58 pm

@Wayne -You can buy 802.11ac routers today based on the draft spec. Real world performance is between 150Mb/s and 300Mb/s depending on range. But share that with your block and you can see how quickly performance will drop.

Mountain View gets 20k users a week. That's nice but it isn't replacing people's internet service, let alone phones and TV. WiFi doesn't offer anything substantially different than DSL or Cable, or LTE, so what's the real value? The discussion about fiber is at least worth having because it offers a substantial upgrade in performance.

And an older article from PC Mag testing Mountain View WiFi speeds, "One drawback, however, was that a speed test showed that I only had download speeds of 1,001 kilobits per second (kbps) and upload speeds of 198 kbps."

@Gennady - You should track down Minnie Ingersoll at Google who was the product manager for the Mountain View Wifi project. It would be interesting to get her perspective now that it has been up and running for a while.

Posted by Mr.Recycle
a resident of Duveneck/St. Francis
on Mar 19, 2013 at 4:23 pm

@Wayne - I don;t know that those articles are particularly relevant. Verizon has spent $23 billion building fiber infrastructure, and they want to maximize their current cities before spending billions more on new cities. And if they want to focus on wireless because it is more profitable, that doesn't in any way mean that wireless is preferable to consumers. It is like suggesting Coke is better than wine because it can be sold at a higher margin.

According to Venturebeat:

While wireline subscriptions fell 3.1 percent in the second quarter, the more profitable FiOS service, which includes phone, internet and television, grew. FiOS sales now comprise 65 percent of the $9.9 billion in second-quarter revenue reported today. Verizon's margin on wireline sales is slowly increasing from the 1.6 percent announced earlier this year. FiOS can be thanked there, too. While overall, a wireline customer brings in $100, an average FiOS subscriber provides more than $149, Verizon said. The company reports 5.1 million FiOS Internet customers and 4.5 million FiOS Video subscribers. Around 70 percent of FiOS customers opt for the phone, internet and video bundle, Verizon announced.

Posted by Wayne Martin
a resident of Fairmeadow
on Mar 19, 2013 at 4:57 pm

> articles about Verizon not relevant ..

Of course they are relevant. Assuming that your $23B is correct, and the 5M customers is corrent, that means that Verizon has spent 4600/drop (customer) and that at 130/year (profit), it will take 35+ years to recover the $23B.

Do you really consider that to be a venture you would invest in?

Closer to home, out in Utah--the UTOPIA project is having a lot of trouble, the following editorial from the Deseretnews expresses a "vote of no confidence" for the continuation of the so-called UTOPIA project, which promised to bring Fiber Optics to rural Utah--
----
In our opinion: Drawing the line on UTOPIA:Web Link
---

No matter who is running the system--it's very expensive, and even when subsidized with taxpayer funds, isn't all that popular.

Posted by Wayne Martin
a resident of Fairmeadow
on Mar 19, 2013 at 5:13 pm

> Verizon has spent $23 billion building fiber infrastructure

One additional point. A fiber system is comprised of: hanging fiber cable, premises termination equipment (including batteries) , headend, neighborhood nodes, software. All of this equipment has a finite lifetimewhich for electronics is exceedingly short (7-10 years), and then all of the electronics has to be replaced. Even if for some strange reason the hardware might actually be working, it's very unlikely that the manufactures will still be making spare parts, or as we have actually seen in many casesthat the manufacturers will even be in business themselves.

Fiber cable underground probably has a fairly long life. But hanging cable, exposed to the elements, may not have the same life time as copper. No one knows for certain.

Bottom line is that Fiber communications systems will likely have very short lifetimes, relative to copper-based systems, and need to be refurbished at least once every ten years. That means that a significant investment will be required over the initial investment. Customers will have to bear that cost. So, the 35+ years in the above simple calculation may actually be much, much, longerperhaps so long that the infrastructure costs can never be recovered without significant extra charges to be borne by the consumer.

Posted by Mr.Recycle
a resident of Duveneck/St. Francis
on Mar 19, 2013 at 5:43 pm

@Wayne - The population density of the country in Utah you are talking about is 8.73 people per square mile. Their policies on broadband are about as relevant to Palo Alto as their policies on cattle grazing.

As far as Verizon, you are trying to paint FIOS as a failure, and it just isn't true. 65% of their 9.9 billion in revenue (not profit) in one quarter came from fios. FIOS is generated $30 billion in revenue last year. You can try to extrapolate numbers to make it seem like a bad business, but Verizon is profitable, and they say that FIOS has been profitable for them for several years.

Posted by RadioGuy
a resident of Barron Park
on Mar 19, 2013 at 6:29 pmRadioGuy is a registered user.

Wayne Martin,

You're Verizon FiOS numbers are way off and fundamentally wrong. Verizon themselves said it cost about $700 to reach each home, about half the cost they initially estimated.

The $23 billion dollar number was Verizon's estimate for building out FiOS when they announced the project. Verizon never actually spent anything close to $23 billion. In fact, Verizon's numbers and cost for the FiOS build-out aren't even visible in their financial statements over the past 10 years.

In retrospect, Verizon's motivation for quoting the $23 billion number is now clear. They simply quoted an astronomical number as a way to trick states and utility commissions into paying for their FiOS deployment by raising rates. After Verizon decided to stop their FiOS build out, states and localities approving rate increases in hopes of encouraging FiOS deployments in their area were left out in cold. To be clear, Verizon floated the $23 billion number simply as way to strong arm wireline rate increases.

If you have any facts to back up the $23 billion dollar number and a 35 year return, you should tell the rest of the world, or shut up. You're simply spreading nonsense in an area you know absolutely nothing about.

Mr. Martin, you have no knowledge of how the telecommunications business works, and absolutely no expertise about wireless technology and what's happening with future wireless technologies. You may oppose FTTP in Palo Alto, but your facts are all wrong.

Posted by Wayne Martin
a resident of Fairmeadow
on Mar 19, 2013 at 6:59 pm

> As far as Verizon, you are trying to paint
> FIOS as a failure, and it just isn't true

Telecom systems are costly, as the numbers found in various public sources show. The fact that they claim that they are profitable doesn't mean much without having their books open, and in front of us. We have no idea how much of the $23B Verizon has paid off from its profits. We've seen how the US Post Office is profitable, as long as it does not have to fully fund its pension system. We've seen Corporations manipulate numbers since the dawn of time.

I am not going to say that FIOS is a failure today, but if Verizon does not expand its service into other cities in its service area for the foreseeable futurethen how is that really a sign of success?

As suggested in my last posting, the FIOS system will likely have to be refurbished at least by Year.10 of its operation. Do you really believe that they don't know this? We are going to have to wait 10-15 years to see what happens. If Verizon is able to increase its customer base, it will recover more of its initial capital costs sooner than later. Of course, there is also the unknown of new competition, which will further complicate the recovery of these investment.

Looking at short term results is not really the best way to think about telecommunications systemswhich typically are expected to service their customers in perpetuity.

If we look at the Cable Coop, it was able to operate for perhaps ten years, and then ran into trouble because its management (a group of Palo Alto residents with no management experience) had failed to think out more than ten years, and had failed to make provisions for the refurbishment of the system. To make matters worse, the Cable Coop had a "secret investor" who wanted his money backforcing the Coop to have to sell in order to provide this "investor" his money back. Oddly, the Coop Management, and Board, had failed to think through all of the possibilities that might befall the Coop.

As to UTOPIA, the population density has nothing to do with the issue. The main issue is whether the people in the rural areas of Utah were going to purchase sufficient services from a Fiber system so that they could pay for the investment. Clearly, the demand did not materializejust the hype from the systems promoters. The City governments that agreed to put money into UTOPIA were sold a bill of goodsbecause, in part, everyone wants to believe the man who has some "magic beans" to sell!

Bottom linethese systems are expensive, and have high maintenance costs. No one really understands that very well, and the people pushing these systems seem comfortable selling "magic beans" rather than the truth!

Posted by Wayne Martin
a resident of Fairmeadow
on Mar 19, 2013 at 7:29 pm

> You're Verizon FiOS numbers are way off and fundamentally wrong

These are not "my numbers"they were posted by someone else who linked to Venturebeat. All I did was a simple calculation of cost per drop on those numbers. If you want to blast someoneblast Venturebeat, and the person who posted numbers you assert are "wrong".

> If you have any facts to back up the $23 billion dollar
> number and a 35 year return, you should
> tell the rest of the world, or shut up.

Read the posting. I used the Venturebeat numbers, and said: "if these numbers are true". That mean that they might not be.

> In retrospect, Verizon's motivation for quoting the $23 billion
> number is now clear. They simply quoted an astronomical number
> as a way to trick states and utility commissions into paying
> for their
> FiOS deployment by raising rates. After Verizon decided to stop
> their FiOS build out, states and localities approving rate
> increases in hopes of
> encouraging FiOS deployments in their area were left out in cold.
> To be clear, Verizon floated the $23 billion number simply as way
> to strong arm wireline rate increases

Let's see .. is this your opinion, or is it fact what you can provide a link to an FCC/Court case/other Federal Filing? The link you provided is not to any official site, so it would seem to be opinion on opinion. That's OK with me, as long as you admit that it is your opinion. Can you do that?

(Oh, the link you provided doesn't provide any real information about FIOS costs.)

You claim that the $23B number that appears in the posting above (not mine) is fantasy. Socan you provide us some documentationhopefully from Verizon, that outlines their state-by-state buildout costs? What would that total come to?

As I stated in my post"if these numbers are true". Since you claim that they aren'tthen my strawman calculation is not valid. I made that clear in my comments. You do get that, don't you? Your personal attack on me suggest that you didn't read what I wrote, or you just like attacking people?

Your claim that the per drop costs at $700/subscriber sounds not out of line. Care to provide a link to your source?

> Mr. Martin, you have no knowledge of how the
> telecommunications business works, and absolutely
> no expertise about wireless technology and what's
> happening with future wireless technologies.

Thanks for stating your opinion, forcefully. Perhaps, under your own name, you could provide us all of the correct informationin a straightforward fashion, and with your guarantee that the future will unfold as you have predicted. Can you do that for us?

By the way, do you think the City Council has a clear vision of how the TC industry works?

Posted by Lee Thé
a resident of Charleston Meadows
on Mar 19, 2013 at 8:17 pm

"What's happened is that these enormous telecommunications companies, Comcast and Time Warner on the wired side, Verizon and AT&T on the wireless side, have divided up markets, put themselves in the position where they're subject to no competition and no oversight from any regulatory authority. And they're charging us a lot for internet access and giving us second class access."
--from a recent Bill Moyers show on the state of telcom in America.

Posted by Mr.Recycle
a resident of Duveneck/St. Francis
on Mar 19, 2013 at 8:52 pm

@Wayne Martin - I respect your postings here, especially regarding schools where you have clearly spent a lot of time an effort to gather information. And I think you have a very solid principled argument against a municipal fiber system (which I also oppose). But, I think your intensity of disagreement has led you into the land of speculation and FUD about fiber networks.

> As suggested in my last posting, the FIOS system will likely have to be refurbished at least by Year.10 of its operation. Do you really believe that they don't know this?

Do you really believe they don't know this? Do you think they are on a suicide mission or do you think with billions on the line they know what the maintenance cost is, and it isn't so bad that it makes them unprofitable. Not much more than 10 years ago I had a 768/128 DSL line. How much of that equipment has been made obsolete? That's just how technology works.

>if Verizon does not expand its service into other cities in its service area for the foreseeable futurethen how is that really a sign of success?

1: You don't know whether they will expand or not. But it is rationale to achieve a certain penetration in existing areas before investing more. Even if 5 years from now Verizon has stopped fiber expansion, we probably wouldn't know if it was because it was inherently too expensive, or their remaining territory was too regulated, demographically difficult, the stock market crashed, or whether tax laws have made investment less easy. You'd need a Verizon insider to give the full story.

>As to UTOPIA, the population density has nothing to do with the issue. The main issue is whether the people in the rural areas of Utah were going to purchase sufficient services from a Fiber system so that they could pay for the investment.

Of course adoption is lower in rural Utah. The people there are farmers, or work at the Malt-o-Meal factory. Palo Alto has people who work in tech who can telecommute, Doctors who can review MRI's remotely, is generally a lot more plugged in, and we drink wine on Sundays.

Posted by SteveU
a resident of Barron Park
on Mar 19, 2013 at 8:57 pmSteveU is a registered user.

Is the Council trying to spend money on anything BUT repairing the aging infrastructure (like Roads)?

Another Sonic.net fan here. They are not error free, but the don't LIE like my old ISP did. Their MOTD messages reflect the true status of their network.
CPA, why not work out a deal and have them take over the fibre? We might get a cost effective (to the end user) solution.

44 posts so far and not one seems to realize yet that the big companies licensing fiber in this community have been and will continue to pay the entire tab to eventually run fiber past every premise in Palo Alto. No taxpayer money required.

A few well-known nay-sayers in town want the City out of every municipal utility business. This includes PG&E, the telcos and cable incumbents. If you are among them, you of course love the irrational rants against fiber.

The rest of us are hoping for a better future for communications than the incumbents have delivered over the past half-century. There is much room for improvement, that's for sure.

We'd like to hear more from the visionaries in town (there are a ton of them, including a number on Council), what they foresee and how Palo Alto may get better positioned to benefit.

Posted by Wayne Martin
a resident of Fairmeadow
on Mar 20, 2013 at 8:30 am

> You're Verizon FiOS numbers are way off and
> fundamentally wrong. Verizon themselves said
> it cost about $700 to reach each home, about
> half the cost they initially estimated.

I don't live on the East Coast (Verizon country), am not a Verizon customer, and don't own any Verizon stock. So, like most people, I only know about Verizon what I read in the papers. Speculation on my part is opinion, although that doesn't make my opinion wrong.

I spent a little time researching FIOS after this person's disputatious postings. While the poster claims that Verizon didn't spend $23B deploying FIOS, the number appears in any number of articles in reputable sources:

The New York Times, The Wall Street Journal and Business Week all cite that number

Is it possible that Verizon has actually spent less than $23B? Yes. Is it possible that Verizon has spent more than $23B by now? Yes. But keep in mind that those of us in the "real world" only know what Verizon tells us.

By the way, Verizon is a public company, so no doubt it has made financial filings with SEC about its various expenditures. So, if it has not spent $23B (or thereabouts)then maybe the SEC should be notified so that it can start an investigation.

> If you have any facts to back up the $23 billion dollar
> number and a 35 year return, you should tell the rest
> of the world, or shut up. You're simply spreading
> nonsense in an area you know absolutely nothing about.
The following is an extract from the NYT/Blog Link above--
Here is how Mr. Moffett looks at the costs of the plan that Verizon has announced for FiOS. Through 2010 the company will pay an average of $817 to run the fiber past the 19 million homes, on poles or under the ground. It will also incur $172 per home passed in other costs related to the video infrastructure. He assumes that 40 percent of the customers passed will buy at least one FiOS service. If you allocate the cost of running the fiber past the homes that don't buy FiOS to those that do, that makes the cost of building the network $2,473 per home. (That cost would be less if more than 40 percent of the potential customers sign up. Or it could be higher, if sales don't achieve the 40 percent level.)
But the costs don't end there. Once someone decides to buy FiOS, Verizon will spend another $718, as Mr. Moffett calculates it, for equipment in the home and the labor to connect it to the network. There is another $130 in marketing expenses, and $576 for interest on money spent to build the network before it is completed.
All this adds up to $3,897 in capital cost for every FiOS customer.
The simple calculation that I performed, based on the Venturebeat data, is not all that different from the speculation published by an industry analyst back in 2008. These more refined calculations point out that Verizon most likely borrowed money to fund this expansion, so interest would need to be added into the total cost calculations. It's unlikely that Verizon has provided us total-cost numbers, but perhaps they have.
I used the term: "cost/drop". Looking around at other's commentary on this matter, it seems a better term would be: "total-capital-expended/customer".
> Verizon themselves said it cost about $700 to reach
> each home, about half the cost they initially estimated.

I was able to locate a reference to this $700 dollar numberin an analysis that claimed that the actual amount must be well over $2,000/drop. I think that terminology probably is part of the problem here. Given the cost of the premises termination equipment, it's quite possible that the Verizon cost from the pole to the Premises is about $700. But this number clearly does not remotely come close to covering costs. In addition to the items I listed above, there also is: inside the home wiring, a modem/set-top box of some sort, and one/more DVRs. While the customer will eventually pay for all of this equipment, Verizon has to front the money to begin with.

The $700 number seems to have been a "target", not an "actual" cost for Verizon.

SoI am going to stick with my initial calculation.

And coming from this from another angleif Verizon spent on 700/customer, with 5M customers it would have spent only about $3.5B to deploy FIOS. That leaves a discrepancy of some $20B between this claim, and the numbers Verizon quotes to the public (and presumably the SEC).

Posted by Wayne Martin
a resident of Fairmeadow
on Mar 20, 2013 at 9:08 am

> But, I think your intensity of disagreement has led you
> into the land of speculation and FUD about fiber networks.

You are welcome to your opinion, as am I. I have tried to document the data behind my positionwhich is more than most people do.

During the last cycle through FTTP-land, I researched the City's proposal, and did a very close analysis of the City's incomplete business plan. I actually produced about 800 pages of material, of which about 400 were submitted into the public record, via the City Council. Did you happen to read any of that information? It was in the public record.

> FUD

People who toss this term around often are trying to sell something that is new, and more-often-than-not, untestedand all too frequently these new things don't measure up to their promoters claims.

Can you provide any direct evidence that I have falsified any of the information I have posted here? If notwhat makes you feel I have done something wrong?

If you were to go back ten years, you would find all sorts of claims about Fiber networks penetration of the American telecommunications scene. That penetration has not happened. Very low cost fiber-to-the-home has not materialized. I agree that higher speeds are achievable with fiberat higher prices. What I don't agree is that everyone in Palo Alto, or the world, needs a 1TB bi-directional link to their home.

That's my opinion. It's not that hard to look around the Net and find other folks making the same claim. I am a fairly heavy NET/WEB user, but the actual number of "down-load minutes" that I use everyday is not very many. I have downloaded thousands of e-books and articles from Google/Books, but guess what? Once this material is downloadedI have to read it. Some of the books I have downloaded are well over a thousand pages/volume (for research purposes). Got any idea how long it takes to read a thousand-page book? Guess what my network connection is doing at that time?

In the mid-90s I attended a two-day symposium at Stanford about the future of data networks. Even though there were some very interesting presentations (Kaiser, Ford Motor, Pacific Telephone, NIPPON Electric), the conclusion of the panel of "experts" that summed up the symposium's content was that "Video on Demand" seemed to be the only viable "product" that high speed networks were good for (or words to that effect) at the time.

Back to Verizon

> Do you really believe they don't know this?
> Do you think they are on a suicide mission or do
> you think with billions on the line they know
> what the maintenance cost is, and it isn't so
> bad that it makes them unprofitable.

Funny that you should mention this. At the Stanford Symposium, an executive from Pacific Telephone stood up and stated that Pacific Telephone had made a commitment to "fiberize" all of California by 2015, and then he said, quite confidentlyand I can tell you folks here that we will be finished by 2010!

Well, within a couple of yearsPacific was bankrupt, in large part because of their "fiberizing" work. Do you remember the name Pacific Telephone and Telegraph?

I suspect that Verizon fully understands its position. However, they are the only people who can tell us what they think.

Reminding people that many companies have gone broke betting on Fiber-to-the-Home is not infusing FUD into this discussion, it is simply using historical fact to temper people who are more inclined to buy "magic beans", than not.

Posted by Scott McMahon
a resident of Menlo Park
on Mar 20, 2013 at 5:51 pm

I'm reading a book called "The Fine Print" by David Cay Johnston, a Pulitzer winning reporter for the NY Times.

In it he claims the following:

The US is 29th in the world in internet speed.

The cable and phone companies are basically monopolies/oligopolies with political control of their regulatory bodies, and therefore, no price control for consumers, and no incentive to keep up with technology. So, not only are they overcharging, but they are also cutting spending and letting our infrastructure go to pot, consequently putting another drag on our economy. He gives many examples of the costs of publicly run internet/cable services vs. the cost and services provided by private services. He gives examples of towns that got tired of being ripped off and installed their own cable/internet utilities. These towns got better service at much lower rates. Not only that, big companies, attracted by the speedy web infrastructure, moved into town and brought new jobs to these towns that put in their own fiber networks.

1 Palo Alto's electric and gas Utilities are famously cheaper than the corporate alternatives. Real Estate Agents I met when looking for a house said PA houses cost more, in part because you get access to the city utilities rather than being at the mercy of PG&E.
2 PA utilities infrastructure isn't falling apart, as far as I know, whereas PG&E blew up a neighborhood just a little ways up the peninsula (remember San Bruno?) and claim that they don't even have construction or maintenance records for their gas pipelines. No one can see how much, if any, testing they've ever done, or what kind of construction they did in the first place, or if anything has ever been maintained. They are in a massive reconstruction here right now. Who do you think is paying for that? Where did the money we paid for ongoing maintenance for the last few decades go?

2 ATT has been behind all kind of deceitful practices. Just in my own experience:
a They put new services on my bill that I never ordered, like call waiting. When I discovered this, they took the charges off, but how much money did they make off busy people who didn't notice?
b Unsolicited/robo calls: I'm on the "Do Not Call List" but regularly get such calls. I try to report them to the "Do Not Call Registry," but you need a name and phone number. The telemarketers are cagey. They don't give you their name or number. When I called ATT they told me, "We have no way to do that. We can't help you. Why don't you sign up for CallerID?" I tried that for a month. The telemarketers spoof it. How many of you think ATT really can't find out who called you 10 minutes ago? Anyone think it would take more than a fraction of a second? What is their incentive to eliminate such calls?
c They offered low and medium speed internet speed service to my address. They said the high speed service wasn't available. I signed up for medium speed (6 mbps, if I recall,) and they collected fees for a few months. My service was awful; intermittent, slow. Eventually, I discovered that my actual speed was below the "Low speed" service level. As it turns out, they weren't actually physically capable of delivering "Medium Speed" service at my address. (They did reimburse me for the months of extra charges -- after I called them on it.)

Mr Martin is certainly entitled to his opinion, as he has repeatedly pointed out in this thread, but Mr. David Cay Johnston's arguments ring truer with my personal experience. Anyone else have relevant experience?

Posted by Jim H
a resident of Community Center
on Mar 20, 2013 at 7:07 pm

I agree with Wayne. I was a user of Fiber to the home provided by Palo Alto before the service was shut down. Although the speed was high, the city provided the worst customer service compared to Verizon, AT&T, DirecTV or any I've used. And from speaking to some of the customers of the dark fiber, they have badly mismanaged the existing dark fiber network.

Certainly the city should not even be thinking about any bundled services as I don't think the have the resources to negotiate licensing like AT&T or Verizon can. And other than simply being involved in partnerships with 3rd parties, they can't possibly keep up with technological change. As evidence - they are talking about expensive fiber at a time when wireless communications is exploding in speed capabilities.

New standards of emerging WIFI will provide extremely high bandwidth for less cost than fiber. My iPad gets 20 mb/sec on 4G LTE at home, while my Uverse connection gets 5MB/sec. Wireless faster than 4G LTE is on the way.

Why did AT&T create a hybrid system with Uverse that uses fiber but provides the last leg via copper? Because the enormous fiber drop costs aren't practical. How could the city do it cheaper than AT&T or Verizon?

And remember Palo Alto's electrical under grounding project that would not be complete for at least 50 years more?

jerry99 is right. Fix the sidewalks and streets, get city pensions under control and consistent with the private sector.

Posted by Alan
a resident of College Terrace
on Mar 21, 2013 at 8:24 pm

To Whom ever has been brooding on this rotten egg at city hall, please indulge yourself and get some decent internet service at your home. Stop wasting time and money better spent on countless other needs in Palo Alto than the fabled, and failed, city run fiber system.

If this is one of your priorities for Palo Alto for the coming year, you are NOT paying attention. All the years I've lived here, not once have I ever heard anyone, except city hall, whine about how much better living her would be if only they had dark fiber to their home. Never.

How about you deal with ditching the cities defined benefit retirement system, save the city countless millions over the years to come, and then, maybe then, will any one care about the city wasting time and money re-investigating dark fiber.

Posted by LN
a resident of Fairmeadow School
on Mar 29, 2013 at 2:44 pm

I'm shocked to see so many complaints about PA services. I lived in PA for 20 years and get great electricity service, water, garbage collection, police, etc. The cost is lower than in other cities. Comcast offers a low quality expensive service and they are constantly try to trick customers. Also, I don't want my ISP to get involved in content business because there is a clear conflict of interest. To get great Internet access we need a true competitive marketplace or a regulated utility. The worst possible option is to have a private monopoly (or duopoly). I hope one day my Internet connection will be as good as the PA garbage collection service!

Posted by Wayne H
a resident of Mountain View
on May 28, 2013 at 8:01 pm

Interesting discussion especially the numbers about the Verizon Fios costs and the WiFi stuff which I think supports my assertion that the optimum solution is the over 1Gbps 802.11ac WiFi for neighborhood nodes (on light or power poles like Mountain View WiFi) supported by a fiber network (also called a backhaul). But I don't know why Google Fiber or Palo Alto isn't pursuing it? It's sort of a high density cellular data system structure. Even though the 802.11ac standard is not finalized, you can buy routers now; such as Negear R6300 - 1.3Gbps (at 5GHz) for $160 on Amazon.

Although short range fiber costs have come down, dedicated cabling to each home, irregardless of whether it's copper or fiber, is costly due to lack of multiplexing by many users. Multiplexing all the way down to the end user is both a key cost containment attribute and the reason cell phone systems can be cost effective with only a few percent sign up of the available market. We should be able to get 10-20Mbps but at a fraction of the cost of fiber to each home since a 1Gbps+ fiber would drive a 802.11ac node (operating in the 5GHz band) which should be able to support 30 or more homes. Of course, home owners would typically need to put a $100-$200 adapter on the roof even if they lived under the node to convert to more standard 802.11b,g (2.4GHz band) in their computers, etc. (Mountain View WiFi works the same way when it works.) In fact, private citizens could implement a neighborhood system (like some neighbors share WiFi) by hooking up fiber to one home which then WiFi 802.11ac shares that with 30+ homes who all co-pay the monthly fiber bill. I don't think it's illegal as long as it's not for profit.

I'm in Mountain View (used to live in Palo Alto) and have been trying to get Google to fix the screwed up free WiFi (due to failed equipment, lack of maintenance - not increased loading as Google would have you believe). I'm also interested in higher speed for streaming and the upending of the telephone DSL and cable modem duopolies which I think make excessive profits on broadband. Ironically, the cable TV companies could implement a 802.11ac Metro WiFi system since they have the fiber backhaul system to drive their cable distribution, both TV and broadband but why would they undercut their own business.

Posted by Not an issue
a resident of Community Center
on May 28, 2013 at 8:16 pm

Maybe the council is confused. They claim they are the guardians of public health so they can ban smoking in parks. Maybe they are taking that a step further and demanding that very household have fiber to eat so that everyone will be healthy and regular. That could be it since are council is easily misled and do not understand how valet parking works

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